In a bold stride toward restoring macroeconomic stability and curbing fiscal indiscipline, the Central Bank of Nigeria (CBN) has reduced its net loans and receivables by over N4 trillion in 2024. This historic financial correction was revealed in the CBN’s latest audited financial statements, signalling a decisive shift away from excessive deficit financing and unsustainable monetary practices.
At the core of the reduction lies the significant curtailment of the apex bank’s overdraft facility to the Federal Government, popularly known as the Ways and Means Advances. In compliance with reforms led by CBN Governor Olayemi Cardoso, the Federal Government overdraft balance was slashed from N7.948tn in 2023 to N3.268tn in 2024—a steep 58.89% drop, or N4.679tn.
The Ways and Means facility, governed by Section 38 of the CBN Act, 2007, permits the Federal Government to borrow up to 5% of its previous year’s revenue. However, this limit was repeatedly exceeded in recent years, sparking widespread criticism of fiscal recklessness and its inflationary consequences.
In 2023, the National Assembly approved the securitisation of N22.7tn in overdraft liabilities, converting them into long-term debt instruments. That strategic decision set the stage for this year’s repayment drive, with the Federal Government clearing N7.3tn to date.
The reduction reflects Cardoso’s commitment to ending “fiscal dominance” and restoring the bank’s primary focus on monetary stability. “Too much of what may appear to be good things can distort an economy,” Cardoso stated earlier in the year, emphasizing that failed interventions and excessive financing undermined monetary policy transmission and private sector lending.
In 2024, the CBN’s net loans and receivables dropped from N16.122tn to N11.977tn at the bank level, and from N15.091tn to N10.959tn at the group level. Total gross loans also contracted, falling from N17.422tn to N13.778tn at the bank level.
These reductions were complemented by an increase in Expected Credit Losses (ECLs), which rose from N1.3tn to N1.801tn at the bank level. The enhanced provisioning underscores improved risk management and a return to disciplined lending practices.
The apex bank also fully cleared its N23.028bn in Promissory Notes and the N802.918bn NESI Stabilisation Strategy Limited Debenture—an initiative created to support liquidity in the power sector. This move demonstrates the CBN’s sweeping rollback of legacy liabilities and its focus on cleaner balance sheet management.
Governor Cardoso’s reforms include a phased withdrawal from the controversial intervention finance model of the previous administration. In 2024 alone, the CBN recovered a total of N252.996bn from various development finance initiatives, including the Anchor Borrowers’ Programme, Real Sector Support Facility, and Commercial Agricultural Credit Scheme.
The Anchor Borrowers’ Programme, once lauded for linking smallholder farmers to offtakers, faced sharp criticism due to high default rates and lack of transparency. Outstanding balances under the scheme dropped from N424.825bn in 2023 to N311.903bn in 2024—a repayment of N112.922bn.
Similarly, the Commercial Agricultural Credit Scheme saw recoveries of N43.33bn, while the Real Sector Support Facility recorded N37.5bn in repayments. The BOI Debenture and Export Development Facility saw moderate declines, while the Non-Oil Export Facility fell by N5.855bn.
In line with this reset, the CBN has suspended new applications under intervention schemes. Cardoso insists that these initiatives distorted the monetary landscape and diverted focus from the bank’s regulatory mandate. “There is no wiggle room for failed interventions,” he declared.
Standing Lending Facility spiked from N29.431bn in 2023 to N386.904bn in 2024, showing increased short-term liquidity borrowing by banks.
Long-term loans increased from N2.009tn to N2.722tn, indicating sustained involvement in structured financial programs.
AMCON Notes, a crucial asset for systemic stability, grew slightly from N3.902tn to N4.136tn.
Staff loans rose modestly to N65.644bn.
The Nigerian Treasury Bonds position remained unchanged at N423m.
Additionally, the CBN saw a sharp decrease in its 6% Perpetual Debentures and cleared the NESI SS Ltd Loan by N8.461bn. Despite the overall reduction trend, the NIRSAL Lending Debenture experienced a slight uptick from N268.655bn to N269.380bn, with repayments ongoing.
Cardoso’s policy pivot, backed by fiscal authorities and international observers, is aimed at restoring investor confidence, curbing inflationary pressures, and fostering long-term economic resilience. Critics argue that while interventions supported key sectors during downturns, the lack of proper oversight led to waste and inefficiency.
The CBN’s reorientation underscores a wider economic strategy under President Bola Tinubu’s administration, which has prioritized fiscal discipline and private sector-led growth.
As Nigeria battles inflation currently hovering above 30% in key regions, the central bank’s efforts to reduce money supply and realign its balance sheet could mark a turning point in the country’s economic trajectory.